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Posts Tagged ‘SRECs’

The Department of Energy Resources (DOER) has released an Emergency Regulation with respect to the SREC program in Massachusetts.

On June 28, 2013, DOER filed an Emergency Regulation to establish rules by which the current RPS Solar Carve-Out program will be complete.  As an Emergency Regulation, the rules become effective upon filing, thus they are now in effect.  DOER has posted the Emergency Regulations on its website.

The emergency regulations expand the 400 MW cap of the current program to accommodate those projects that are well along in the development cycle, and to allow for small projects to continue moving forward in development.

Available on the DOER website is a list of projects that have been determined to be qualified or that submitted an administratively complete application, under the 400 MW cap.  Additionally, there is a list of projects that have applied outside of the 400 MW capacity limit.  If any projects that have qualified under the 400 MW cap have their applications withdrawn or revoked, project capacity from outside the 400 MW capacity limit will not be transferred under the cap.  Projects falling outside of the 400 MW capacity limit will be subject to the rules of the emergency regulations summarized below.

  • Units under the 400 MW capacity limit, as determined by DOER with a Statement of Qualification or an application deemed administratively complete by DOER that are greater than 100 kW, must meet the following construction timelines to maintain qualification in the current solar program.
  • Units that are outside the 400 MW capacity limit, as determined by DOER, and are greater than 100 kW must have an Interconnection Service Agreement fully executed by the customer and utility dated on or before June 7, 2013. They must meet the construction timelines below to be awarded a statement of Qualification under the current program.
  • Construction Timelines for Projects greater than 100 kW:
    • Receipt of Authorization to Interconnect from its local distribution company by December 31, 2013.
    • Units that do not receive an Authorization to Interconnect by December 31, 2013 may receive an extension to June 30, 2014 only if it can be demonstrated, to the satisfaction of DOER, that the Unit has expended at least 50% of its total construction costs by December 31, 2013.
    • If a Unit is not in receipt of the Authorization to Interconnect as of June 30, 2014 but can demonstrate, to the satisfaction of DOER, that the missing Authorization is due to delays of the local distribution company or due to remaining steps required by other parties for safe and reliable interconnection, the Statement of Qualification will be extended until the Authorization is received or denied.
  • Units equal to or less than 100 kW, or designated as a Community Solar Garden by MassCEC, regardless of their placement in the 400 MW capacity limit, will be qualified under the current program provided they submit a Statement of Qualification Application to DOER and have an Authorization to Interconnect by December 31, 2013 or prior to the effective date of the new solar program, whichever is later.
  • Units failing to meet construction timelines will have their Statements of Qualification revoked.
  • The effective date of all Statement of Qualifications issued by DOER under the current program will be no later than December 31, 2013. This provision will ensure that the compliance obligation of the current solar program will not be extended an additional year, at additional ratepayer cost.
  • The compliance obligation formula of the program as of the effective date of the regulation and after the program reaches its program cap will be revised from 400 MW to the new Program Capacity Cap announced by DOER in July 2014, to accommodate actual supply. DOER will provide exemption to the additional compliance obligation, once the obligation reaches the new cap, for load under contract prior to the effective date of the emergency regulation.

Continuing Regulatory Procedure

While DOER is confident in the Emergency Regulation as written, in accordance with administrative procedure laws (M.G.L. ch. 30A), the regulation will remain in effect for 90 days, with the opportunity for the Department to make the regulations permanent. DOER will soon schedule and announce a Public Hearing and comment period, in accordance with administrative procedures, and move to quickly promulgate the final regulation so as to keep the regulations in effect throughout the construction timelines and until the new Solar Carve-Out Program has started. Given the importance of timely business decisions being made based on the rules of the Emergency Regulations, DOER recognizes the prudence of completing the regulatory process quickly.

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The solar program in Massachusetts has been so successful that the governor has announced a bold new goal.

On June 7, 2013, the Department of Energy Resources (DOER) will hold a stakeholder meeting to present its proposed policy for the post-400 MW Solar Carve-Out program in Massachusetts. The meeting will be held at 10:00 a.m. in the Gardner Auditorium in the State House.

The policy design changes follow Governor Deval Patrick’s announcement of the state’s ambitious new solar goal of 1600 MW installed by 2020.

The current Renewable Portfolio Standard (RPS) Solar Carve-Out program has been highly successful in growing solar development throughout the Commonwealth. The program stimulated enough growth to meet the governor’s goal of 250 MW of solar installed by 2017—four years early. The program’s success has prompted the continuation and expansion of the RPS Solar Carve-Out that will be outlined at the June 7 stakeholder meeting.

In recent months, DOER has received a surge of Statement of Qualification Applications (SQA) for the current Solar Carve-Out programs, with over 550 MW of applications either qualified or under review, of which more than 400 MW of SQAs are at least administratively complete. Until June 7, DOER will review applications and allow applicants two weeks to correct any deficiencies before rejecting an application. Starting on June 7, SQAs will be reviewed under the revised regulation.

The DOER has posted the presentation from a stakeholder meeting on March 22, 2013; it will guide stakeholder discussion.

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In a typical solar power purchase agreement (PPA), a community hosts solar PV on public rooftops or land and enters into a long-term contract for the purchase of electricity from the PV system(s). This third-party ownership model is the most common way in which Massachusetts communities procure solar PV systems (as opposed to outright ownership, for example).  While 2010 and 2011 saw a significant number of public solar PPA projects in the state, interest from solar developers has slowed in recent months. As a result, those communities just releasing RFPs for their solar project or reviewing bids from a recent solicitation may not see as many responses or as attractive prices as their predecessors, leaving many to wonder –what is going on in the Massachusetts community solar market?

Concern over Renewable Energy Incentives

Solar Renewable Energy Credits (SRECs) generated by PV systems (which communities typically give over to solar developers in PPAs) are an important revenue stream in a developer’s financial model for a PV project. Due to recent analyses of and concerns about the state’s SREC market, some developers are struggling to secure SREC contracts at sufficient prices. Without adequate SREC contracts, developers cannot offer attractive PPA rates to communities. Many solar developers active in Massachusetts have slowed or stopped activity in the state.

What does that mean for my community’s hopes for a solar PPA project?

Some developers and analysts believe that Massachusetts SREC prices will recover in six to nine months and that the pace of development will pick up again at this time. In the interim, communities may not see as much interest from the development community or receive attractive PPA rates (e.g., less than 10 cents) on proposed projects.

In order to take advantage of federal incentives that apply to solar projects developed in 2012, community solar project teams should use this period to prepare for a summer 2012 RFP (or RFQ) release, should the SREC market turn around at that time. Proactive teams can use online tools such as the National Renewable Energy Lab’s In My Backyard tool or PVWatts for preliminary resource assessments and to narrow down potential project sites. Using the results of these analyses, as well as details about the sites, solar project teams should begin preparing language for a RFP or RFQ. If more detailed site assessments are conducted, finding should also be included in the RFP.

If and when Massachusetts SREC market projections improve, the most proactive project teams will be first in line to do business with an eager solar industry.

What if we are currently negotiating a solar PPA?

Local officials and staff in Massachusetts are constantly contacted by interested solar developers. If your community is executing a PPA project at this time, be sure to get as much information as possible as possible about the SREC assumptions used in the developer’s financial model for your project. If a developer assumes more than $285 per megawatt-hour (28.5 cents per kilowatt-hour) for 10 years worth of SRECs, tread cautiously. Make sure that your PPA does not contain, for example, a “Change in Law” provision that allows the developer to renegotiate the PPA price with you during the contract term if their SREC assumptions do not hold (e.g., if the assumptions about SRECs used to price your project were out of date or overly optimistic). Also, if the solar developer will use SREC brokers to sell the SRECs from your project, encourage them to get regular updates from their brokers on available SREC contracts.

 

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